Why can't I retaliate against a high level player that attacked my base?

You can only attack bases within five levels of your fleet level, so it is unlikely that you can create a fleet powerful enough to attack a high level player's base. That player can build low level fleets to attack your base though.

How do you deal with this?

You build a fleet designed to crush their attacking fleet and destroy them until they get tired (or embarrassed) of losing to a low level player.